1 Volatile Stock with Promising Prospects and 2 We Ignore

Market swings can be tough to stomach, and volatile stocks often experience exaggerated moves in both directions. While many thrive during risk-on environments, many also struggle to maintain investor confidence when the ride gets bumpy.

These stocks can be a rollercoaster, and StockStory is here to guide you through the ups and downs. Keeping that in mind, here is one volatile stock with massive upside potential and two that could just as easily collapse.

Two Stocks to Sell:

Zevia (ZVIA)

Rolling One-Year Beta: 1.15

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Why Does ZVIA Worry Us?

1. Sales trends were unexciting over the last three years as its 2% annual growth was below the typical consumer staples company
2. Revenue growth over the past three years was nullified by the company’s new share issuances as its earnings per share fell by 27.1% annually
3. Cash burn makes us question whether it can achieve sustainable long-term growth

Zevia’s stock price of $3.39 implies a valuation ratio of 1.6x forward price-to-sales. Check out our free in-depth research report to learn more about why ZVIA doesn’t pass our bar.

PENN Entertainment (PENN)

Rolling One-Year Beta: 1.44

Established in 1982, PENN Entertainment (NASDAQ:PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.

Why Is PENN Risky?

1. Lackluster 1% annual revenue growth over the last two years indicates the company is losing ground to competitors
2. Earnings per share fell by 46.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $18.55 per share, PENN Entertainment trades at 1.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including PENN in your portfolio.

One Stock to Watch:

Wabtec (WAB)

Rolling One-Year Beta: 1.22

Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE:WAB) provides equipment, systems, and related software for the railway industry.

Why Are We Fans of WAB?

1. Operating margin improvement of 6.4 percentage points over the last five years demonstrates its ability to scale efficiently
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.7% exceeded its revenue gains over the last two years
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy

Wabtec is trading at $200 per share, or 27.9x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

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